After a storm, fire, burst pipe, hailstorm, or other event causes property damage to your home or business, you expect the insurance coverage you’ve paid for to help repair or replace what was damaged. Too often, however, Texas policyholders receive a denial, a low estimate, or months of frustrating silence.
The good news is that Texas has some of the strongest policyholder-protection laws in the country, with hard deadlines and real penalties. Here’s how property-damage claims work and what to do when your insurer isn’t playing fair.
Start by documenting everything
Your claim is only as strong as your evidence. Before and during the claims process it’s important to document everything… everything!
- Photograph and record video of all damage before making temporary repairs. Keep damaged items when it is safe and practical to do so.
- Make reasonable temporary repairs to prevent further damage, such as covering a damaged roof with a tarp, and keep all receipts. Most policies require policyholders to take reasonable steps to protect the property from additional damage.
- Obtain an independent repair estimate to compare with the insurer’s estimate.
- Keep a written log of every phone call, adjuster visit, letter, and email, including the dates and the names of the people involved.
You should also review your policy’s declarations page, coverage provisions, exclusions, deductible, and “duties after loss” section. Report the claim promptly and confirm important communications in writing.
Texas gives insurers specific deadlines
Texas does not leave the timing entirely to the insurer’s discretion. Under the Prompt Payment of Claims Act, found in Chapter 542 of the Texas Insurance Code, an insurer generally must:
- Acknowledge your claim, begin its investigation, and request any necessary information within 15 days after receiving notice of the claim;
- Accept or reject the claim within 15 business days after receiving the items, statements, and forms needed to establish final proof of loss; and
- Pay an accepted claim, or the accepted portion of a claim, within five business days after notifying the policyholder of its decision.
An insurer that cannot accept or reject the claim within the initial decision period may provide written notice explaining why it needs more time. It generally must then accept or reject the claim within 45 days after providing that notice. Different deadlines may apply to eligible surplus-lines insurers and in certain other circumstances.
If an insurer that is liable for a claim violates Chapter 542, it may owe the policyholder the amount of the claim, statutory interest, and reasonable and necessary attorney’s fees. For many claims, the statutory interest rate is 18% percent per year. Claims governed by Chapter 542A, however, are subject to a variable interest rate tied to the Texas judgment interest rate, plus five percentage points. Attorney’s fees in Chapter 542A cases may also be limited.
A policyholder does not have to prove that the insurer acted in bad faith to establish a prompt-payment violation. The policyholder must, however, establish that the insurer is liable for the claim and failed to comply with the statute.
Unfair claim practices are separately prohibited
Chapter 541 of the Texas Insurance Code prohibits unfair or deceptive claim-handling practices. These may include:
- Misrepresenting policy terms or coverage;
- Failing to attempt a prompt and fair settlement when the insurer’s liability has become reasonably clear;
- Refusing to pay a claim without conducting a reasonable investigation; or
- Failing to provide a reasonable explanation for a denial or settlement offer.
If the insurer committed a violation knowingly, a court may award up to three times the policyholder’s actual damages. When a covered claim is denied or substantially underpaid, a property insurance attorney may examine the insurer’s communications, claim timeline, policy language, and competing repair estimates to determine whether the conduct violated Chapter 541, Chapter 542, or both.
Weather-related claims have an additional requirement
If your damage came from a natural disaster, such as a hailstorm, windstorm, hurricane, wildfire, or similar natural disaster, Chapter 542A adds a requirement: before filing suit, you generally must give the insurer a 61-day pre-suit notice stating what the insurer did wrong and the amount you’re owed.
This is a step that’s easy to overlook and that can complicate a case if missed, so it’s worth knowing before you head toward litigation.
What you may be able to recover
Depending on the facts and the legal claims involved, a successful property insurance case may include:
- The amount owed under the insurance policy for the covered loss;
- Statutory interest on an overdue payment;
- Actual damages and, for a knowing Chapter 541 violation, an award of up to three times the actual damages; and
- Reasonable and necessary attorney’s fees and court costs, subject to any applicable statutory limitations.
The available remedies depend on the policy, the cause of the damage, the insurer’s conduct, and the statutes governing the claim.
Watch the filing deadlines
A claim under Chapter 541 generally must be filed within two years after the unfair or deceptive act occurred or after the policyholder discovered—or reasonably should have discovered—the conduct. A breach-of-contract claim is ordinarily subject to a four-year limitations period, but an insurance policy may contain a valid contractual provision that significantly shortens the time available to file suit.
Because different claims may have different deadlines, you should review both the law and the suit-limitation language in the policy. The Chapter 542A presuit-notice requirement can also consume part of the time remaining before a deadline expires.
Practical steps if your claim is denied or underpaid
- Ask for the insurer’s decision in writing, including the specific policy provisions on which it relies.
- Request the insurer’s estimate and any claim documents it is willing or required to provide.
- Compare the insurer’s estimate with your independent estimate and identify omitted or undervalued repairs.
- Consider filing a complaint with the Texas Department of Insurance, which can review the complaint and request a response from the insurer.
- Be accurate and cautious when giving a recorded statement. Do not speculate about facts you do not know.
- Review any release or settlement language carefully before accepting a payment described as “full” or “final.”
- Track the applicable limitation periods and any presuit-notice requirements.
Texas law was written to level a very uneven playing field between policyholders and insurers. If your property-damage claim has been denied, delayed, or underpaid, you have more leverage (and clearer deadlines and penalties) than the insurance company would like you to realize.